5 caramel squares
1/4 cup milk
1 teaspoon peanut butter
1 tablespoon corn syrup
1/2 teaspoon vanilla
1/2 teaspoon salt
1 1/4 cups powdered sugar
20 caramel squares
1 tablespoon water
2 cups dry roasted peanuts (slightly crushed)
Combine the first six ingredients in a sauce pan. Cook over low heat until the caramel has melted and stirs smooth. Add 3/4 cup powdered sugar and stir to mix in. Reserve the remaining sugar.
Turn heat to medium high. Using a candy thermometer, cook caramel mixture until exactly 230F while stirring often. Remove from heat, let cool for a few minutes, and add remaining powdered sugar. Use a hand mixer to beat in the sugar for a couple minutes. Let candy cool for 20 minutes. Divide candy into eight equal pieces and form each into 4 inch logs. Place on wax paper and let cool for one hour.
In a double boiler, add remaining caramels and water. Melt until smooth. Remove from heat, but keep hot water under the caramel so it doesn't firm up. Use a pastry brush to coat one of the logs with hot caramel. Roll in peanuts in a shallow dish. If any spots are not completely covered in peanuts, apply more caramel and stick back in peanuts. Repeat with the remaining logs.
Allow to cool completely before eating.